November 12, 2008 / 7:12 AM / 9 years ago

UPDATE 2-AMG Q3 core profit more than doubles

* Q3 core profit up 121 pct

* Expects to exceed full-year EBITDA target

* Positive for growth prospects of core markets

* Stock down 0.80 pct, in line with mid-cap index

(Adds shares, analyst comment)

By Catherine Hornby

AMSTERDAM, Nov 12 (Reuters) - Dutch-listed Advanced Metallurgical Group NV (AMG) AMG.AS more than doubled core profit in the third quarter despite weaker metals prices and tough economic conditions, the company said on Wednesday.

Earnings before interest, tax, depreciation and amortisation (EBITDA) rose 121 percent to $71.1 million from $32.1 million in the same period the previous year.

The firm, which launched on the Amsterdam Stock Exchange in 2007 and was included in the mid-cap index .AMX in March, said it now expected to substantially exceed its full-year 2008 EBITDA target of 65 percent growth over 2007.

“AMG’s results were better than expected,” said Petercam analyst Luuk van Beek. “But the metals markets are becoming much more difficult.”

Shares in AMG were down 0.80 percent at 14.81 euros at 0943 GMT, while the mid-cap index was down 1.11 percent. The stock has tumbled about 70 percent since the start of the year, hit by concerns about declining commodity prices and weakening demand for its products in slowing economies.

AMG’s specialty metals and vacuum furnace systems make components for the aerospace, energy, electronics, chemicals, construction, transport and consumer products industries.

Demand and pricing for some of its major products were clearly being affected by growing economic uncertainties, AMG said, and it was responding by adjusting production levels and increasing cost control.

“Through AMG’s diversified business model, conservative balance sheet and significant cash position, AMG is well positioned to endure the economic fallout from the global credit crisis,” Chief Executive Heinz Schimmelbusch said.

He added that the firm would focus on protecting free cash flow in 2009. AMG expected the performance of its Advanced Materials division to decline in 2009 compared to 2008 while its Engineering Systems division’s would perform consistently.

The company’s majority-owned subsidiary, silicon processor Timminco TIM.TO, shipped 300 metric tonnes of solar grade silicon in the third quarter, up 36 percent from the second quarter.

Output and pricing at the division, which produces silicon for solar cells that turn sunlight into electricity, were lower than some analysts had expected.

“The progress of Timminco was disappointing, and that’s one of the main value drivers for the shares,” Van Beek said. (Reporting by Catherine Hornby; Editing by Erica Billingham and Simon Jessop)

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